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Changing roles of the CEO during growth

Module 3: The changing roles of the CEO

Very few CEOs know that companies go through different stages of growth. A company, just like a child, requires different kinds of leadership at each stage to enable it to continue to develop and grow. Companies normally transition through four distinct stages of growth: start-up, initial growth; rapid growth; and continuous growth. Not transitioning to a new role at each stage, or playing the appropriate role, actually inhibits a company’s growth. In short, to unlock your company’s growth potential you need to ensure you’re playing the right role at each stage of growth.

Let’s talk through the changing role of the CEO during growth:

ANZ Business Growth Online Program presented by Dr Jana Matthews, Australian Centre for Business Growth at UniSA.

Start-up

When you’re in start-up, you are the big red dot. You make all the decisions and you do almost everything. You design the product, meet with the bank, talk people into joining you and convince customers to try your product. You are the determining factor regarding what the company is – and becomes. 

This stage is very seductive because you are the centre of everything. The company's identity is very dependent on you, what you do, how you act, who you hire, what kind of customers you secure, and what kind of customer service you provide. 

Initial growth

The next stage is initial growth, which requires you to play a different set of roles from start-up. You need to stop being the sole decision-maker, begin delegating, and identify where the company has the biggest opportunities for success. Once you have this figured out, you should have a much better sense of how to move forward with the company’s growth and begin to chart the direction for the company – and delegate!

Note: We cover “how” to delegate in an article that focuses on the five levels of delegation.

This stage is very seductive because you are the centre of everything

The first change required is to hire people who are smarter and more experienced you are

Rapid growth

Some companies have a steady growth trajectory. Other are jettisoned into rapid growth due to large customer orders or when a strategic alliance is formed. The role of the CEO in rapid growth is radically different than the roles played in start-up and initial growth.

The first change required is to hire people who are smarter and more experienced you are, in several functional areas (e.g. sales, operations, finance, business development). Rather than being the person who knows the most and makes all the decisions, your job as CEO is to find the smartest and most qualified people in those functional areas who are a good match with the company’s values. Then you can coach them to high performance.

The next change at this stage is to ensure that there is frequent and appropriate communication throughout the organisation and that everyone is working together as a team. Once these things are in place, then you can lead staff through a planning process.

Continuous growth

If you have done a good job selecting great people on your executive team, modelled good communication, taught your team to delegate and engaged them in developing executing plans, then you can move into the new roles that are required in continuous growth.

The fourth role that you need to play during the continuous growth stage is the Chief of Culture

In continuous growth, you're finally able to play the outside-in role and look for changes in market, customers’ demands, technology and competition. You can also start identifying opportunities for growth. But you need to prepare the company for the changes that are coming. You need to be the change catalyst.

The third role you need to play is as organisation builder and rebuilder. As various members of the executive team leave, you need to reassess the organisation, roles and responsibilities and add people who have different skills and experience in order for your company to move forward. In other words, don’t just replace Jim with a clone of Jim – reassess before you hire.

The fourth role that you need to play during the continuous growth stage is the Chief of Culture. Assuming that you have developed a set of company values that underpin the culture, there will be times when you will have to remind people about the culture and manage with those that are not operating in line with values. 

The Growth Path

We like to think that growth is a straight line from the bottom left to the top right, but we know that's not the case. It’s comprised of many zigs and zags, two steps forward and one back – or one step forward and one step sideways. If you haven't put in the right processes and systems, built a strong infrastructure, hired the right people or built a strong executive team, the company will try to get to the next stage, then fall back to the prior stage – or go through turbulence. But when you have developed a plan and have a strong team, you can quickly get through turbulence and return to your growth curve.

It's very important that, as CEO, you learn to play the right role during each of the various stages of growth. Just as parents need to change the role they play as their child is growing up, your role will change as the company grows. Playing the right role at the right stage will accelerate growth. Playing the wrong role, or refusing to change roles, can stunt growth.

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